Trade Protection Without Trade Promotion: Why Tightening Trade Rules Alone Would Not Strengthen U.S. Economic Security

During the Donald Trump and Joe Biden administrations, U.S. policy to promote economic security has embraced defensive measures, such as tightening sanctions and export controls, scrutinizing foreign investment, and conducting national security reviews for certain imports. While these steps aim to protect domestic industries and national security, they have sidelined one essential aspect of economic security: trade liberalization. The upcoming presidential election offers an opportunity to reconsider how trade liberalization can be a vital component of strengthening economic security through growth and global competitiveness.

A 2024 Center for Strategic and International Studies (CSIS) report notes that the concept of economic security in the United States has historically been more inward-looking (e.g., Social Security and labor concerns), and it has only been about a decade since policymakers have contemplated its meaning in a more international context. While there is still no universally accepted understanding of economic security, it generally describes a country’s efforts to protect itself from economic coercion while growing its technological superiority.

The question is how the United States should utilize its defensive and offensive toolkit to strengthen its economic security. Defensive trade policies encompass measures including tariffs, sanctions, and export controls aimed at shielding domestic industries from external competition or coercion. In contrast, offensive policies, such as negotiating comprehensive free trade agreements and opening markets for U.S. products and services, drive growth. While defensive actions can safeguard key sectors, they cannot alone sustain the demand required to propel U.S. technological innovation and production.

Viewing trade policy through this lens is critical because while it is possible to implement defensive measures and encourage inbound investment, without access to growing international markets, demand could be insufficient to sustain U.S. production—which would be detrimental to the U.S. objective of increasing technological superiority.

In recent years, the United States has increasingly turned to industrial policy to stimulate domestic growth through legislation—notably the CHIPS Act and the Inflation Reduction Act—that aims to boost manufacturing in sectors such as semiconductors and clean energy. While those measures could support domestic industry and promote economic resilience, they are not a substitute for international trade engagement. Subsidies are constrained by international trade rules, especially in the context of exports, and there appear to be certain idiosyncrasies on whether subsidies tend to curtail imports or expand exports depending on the sector.

Furthermore, the government’s presence in other sectors is not as prevalent. Unlike past eras in which government-backed programs like the Defense Advanced Research Projects Agency (DARPA) were leading technological innovation, today’s advancements in artificial intelligence (AI) and other critical technologies are predominantly driven by private-sector investment. According to the Artificial Intelligence Index Report 2024, private investment in AI in the United States was about $67.22 billion during 2023, while the public sector investment in AI research and development (R&D) across various departments in the Networking and Information Technology Research and Development (NITRD) program was about $1.87 billion, and the U.S. Department of Defense budget request for AI-specific research was about $1.8 billion. Restricting market access or discouraging outbound investments could dry up the resources needed for R&D, stalling progress in high-tech sectors and weakening the United States’s position as a global leader in innovation.

During the Trump and Biden administrations, the only comprehensive trade deals that the United States struck were the Trump-led U.S.-Mexico-Canada Agreement (USMCA) and limited changes made to the U.S.-South Korea Free Trade Agreement (KORUS). As noted by the Congressional Research Service (CRS), the Biden administration has focused on “a worker-centered trade policy,” but did not pursue any comprehensive free trade agreements. (In accordance with Article XXIV:8 of the General Agreement on Tariffs and Trade [GATT], which requires a trade agreement to cover “substantially all” trade, certain mini-trade deals are not considered.) Furthermore, experts comparing both Donald Trump and Kamala Harris’s trade policy proposals raised during their campaigns show a continued lack of focus on trade liberalization.

Meanwhile, China has reached a deal on the Regional Comprehensive Economic Partnership (RCEP), which covers fifteen Indo-Pacific countries and creates the world’s largest trade block that covers approximately 30 percent of global gross domestic product. China has also signed a trade deal with Mauritius in 2019 and upgraded its trade deal with New Zealand, which came into force in 2022.

While China is increasing its influence in the Indo-Pacific, the United States is notably absent in negotiating comprehensive trade deals. The International Monetary Fund estimated that Asia would account for about 60 percent of global growth during 2024 and will likely maintain its significance for the foreseeable future. With the Indo-Pacific accounting for a substantial share of global economic growth, U.S. companies risk losing market share unless trade liberalization efforts are ramped up.

While focusing on specific trade deals with developed economies could be an intriguing idea from a defense policy perspective, many of those countries have their own subsidized industrial policies as well, and their economic growth trajectories appear worse than the United States’. The United States will not be able to take advantage of the growth opportunity without also focusing on emerging markets. Striking trade deals with emerging markets will make the United States more competitive, which will in turn strengthen U.S. economic security.

Comprehensive trade agreements offer more than just economic benefits; they are strategic tools that allow the United States to set global standards in emerging industries, ensuring that competitors adhere to rules that protect intellectual property, labor rights, and the environment. Engaging in trade liberalization enables the United States to shape the economic landscape in its favor, rather than merely reacting to policies set by others.

The path to strengthening U.S. economic security lies not solely in protective measures but in a balanced trade strategy that embraces both defensive and offensive tools. By reengaging in trade liberalization, the United States can secure its economic interests, maintain its technological edge, and drive growth in a globalized economy. The time is ripe for the next administration to adopt a comprehensive trade policy that positions the United States as a leader, not just a protector.

John Taishu Pitt is an international trade associate at Curtis, Mallet-Prevost, Colt & Mosle LLP.